TY  - JOUR
AB  - Purpose Student-managed investment funds typically pursue “plain vanilla” objectives. The purpose of this paper is to demonstrate the value of adding option strategies to reduce the risk of equity positions around earnings announcements. The collar strategy is one such technique with the advantages of a low net cost and limited potential losses.Design/methodology/approach The authors provide recommendations for utilizing the collar strategy around earnings announcements. The authors also discuss how the value of this strategy is related to the literature on option pricing and earnings announcement returns.Findings Risk management strategies can enhance the pedagogical value of student-managed investment funds. The authors document how students have successfully utilized the collar strategy to immunize risk.Originality/value The collar strategy can enhance the pedagogical value of student-managed investment classes in several ways. First, students learn how to implement risk reduction strategies. Second, the proper implementation of these strategies requires students to learn the complex mechanisms associated with corporate earnings dissemination and analyst coverage. This also provides an opportunity to study earnings drift, which is a persistent and economically significant financial anomaly.
VL  - 46
IS  - 5
SN  - 0307-4358
DO  - 10.1108/MF-05-2018-0198
UR  - https://doi.org/10.1108/MF-05-2018-0198
AU  - Hughen J. Christopher
AU  - Lung Peter P.
PY  - 2018
Y1  - 2018/01/01
TI  - Risk management in student-managed funds: Earnings announcements and the collar strategy
T2  - Managerial Finance
PB  - Emerald Publishing Limited
SP  - 692
EP  - 702
Y2  - 2024/04/25
ER  -